Acquiring China: Starting from the Baoshan-Handan Battle!
2006/6/2 21:44:58
Capital globalization means the global pricing of asset values. The recent changes in domestic housing and oil prices reflect this irreversible mega-trend, and all of this will ultimately be most fully manifested in the capital markets—especially after the domestic capital market achieves full tradability of shares, such reflections will no longer be merely theoretical.
The capital market, in the final analysis, achieves real-world ownership through virtual pricing. This interplay between the virtual and the real gives rise to all manner of stories in the capital market. Of course, most stories are of the "quenching thirst by gazing at plums" or "filling one's belly by painting cakes" variety. But for large capital, besides exploiting these cake-painting games to trap people and extract money, the more important goal is to leverage these virtual mechanisms to achieve real-world objectives.
These past few days, the Baoshan-Handan battle—which was already no secret in private circles—has become today's headline news. Setting aside whether this is yet another cake-painting game, it can be said to be pioneering in the same spirit as the Baoshan-Yanan battle of over a decade ago. The latter was a game played within one specific fully tradable stock, while the former is a game that inevitably emerges against the backdrop of comprehensive full tradability.
A couple of days ago, a major capital market player from a neighboring country came to Beijing, and we chatted for an entire afternoon. In his country, cultural exports have been booming recently, and cultural concepts are now all the rage. Besides the listed companies he already controls, a stock he recently acquired in this sector rose seventeen-fold in three months. Having just acquired a casino in a Southeast Asian country, his visit this time wasn't about gambling—it was about finding opportunities to enter the Chinese capital market. One reason was a major change in certain tax policies in his country; second, he hoped to bridge a channel for capital flow between the two countries' capital markets; and finally, most importantly, Chinese asset prices are severely undervalued, which means opportunities for playing big games.
The man had brought dossiers on dozens of domestic listed companies, hoping to select three or four for cooperative acquisitions. This ID, of course, discussed these matters with him in a very professional manner, and in fact, this kind of activity has been nothing new over the past year or two. Capital globalization means capital will inevitably flow between countries through every possible channel. If acquiring China was once a myth, then now the myth is no more. Look—at current domestic asset prices, a few hundred million US dollars can control a major national steel enterprise. What this all signifies and warns of hardly needs further elaboration.